Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Cuirim fáilte roimh an deis a bheith ábalta labhairt inniu ar an tuairisc seo agus an fiosrúchán atá ag dul ar aghaidh anois le blianta fada ó thaobh an díolachán de Siteserv a tharlaigh in 2012. Tá sé seo ar na bacáin le tamall fada. Caithfimid díriú isteach agus achoimre a dhéanamh ar cad chuige a raibh an coimisiún bunaithe sa chéad dul síos leis an bhfiosrúchán seo a dhéanamh, anois go bhfuil sé foilsithe sa tseachtain a chuaigh thart.

I welcome the opportunity to speak following the long-awaited publication of the commission of investigation concerning the Siteserv transaction, which took place in 2012. This report has had a long gestation. Before making a number of comments and observations regarding the findings of the commission, it is worth recalling the very reason this commission was established and this investigation was carried out, so long has it been. Back in 2012, households, businesses and the taxpayer were all still reeling from the effects of the financial crash. Many banks were still trying to recover as much money as they could. One such bank was IBRC, formerly Anglo Irish Bank, which was then State-owned following a €34 billion bailout from the taxpayer in 2009.

Three years later, in 2012, Siteserv, then a business services company group, was under significant financial strain and owed IBRC, and ultimately the Irish taxpayer, €162.2 million. It was in 2012 that Siteserv was sold at a price of €45.4 million euros to Cathkin Investments Limited, or Millington. Following the sale, Siteserv paid €44.3 million as a final settlement of its debts with IBRC, with IBRC writing off €118 million of the €162 million that had been owed to the bank by Siteserv.

This transaction was of interest to the public and to the taxpayer for a number of reasons. First, it emerged there were other companies, such as Altrad and Anchorage, that had made bids for Siteserv, with claims made that Anchorage had even made a higher bid than Millington but the bid had not been accepted. This led to justifiable concerns regarding whether IBRC could have recouped more money on behalf of the taxpayer and whether Siteserv had been undervalued as a result. This question was of crucial importance. This was not simply a normal commercial transaction but one in which the interests of the taxpayer were involved. This led to further concerns regarding the management of the sales process, whether favourable treatment had been conferred on Millington and its owners, and why higher bids were rejected if they had been made.

Second, it later emerged that, following the transaction, Siteserv shareholders would be paid €5 million. This was highly unusual given that, in the normal course of events when a bank is writing off unpaid obligations, shareholders are never in such a position. This raised further questions regarding the propriety of the transaction and the entire process surrounding it. These questions were reasonable, given the revelations that had emerged, and it was in the public interest that answers be sought. In June 2015, the commission of investigation was established following an order under the Commissions of Investigation Act. The following month, Mr. Justice Brian Cregan was appointed to lead the commission. It should also be noted that, under the legislation, the commission is not only tasked with investigating the Siteserv transaction, but any transactions in which Anglo Irish Bank wrote off €10 million or more. There were 38 such transactions, and a key question following this report into one of these transactions is the future of the commission. I will come to that at the end of my contribution.

I wish to comment on a number of the findings and conclusions made by the commission in the report. The first point to note is that the commission has determined, "It can be concluded that the Bank made its decision to approve the sale of the Siteserv Group to Mr O'Brien in good faith, but based on misleading and incomplete information provided to it by the Company." The conclusions with respect to the actions of Siteserv are very different, with the commission finding that the decision by Siteserv to offer Millington and its owner exclusivity on the deal was "so tainted by impropriety and ... wrongdoing" that, from the perspective of the bank, the transaction was not commercially sound. In this regard, the commission also found that the manner in which the transaction was conducted, the decisions and actions taken in the course of the transaction, and its outcome were all unreasonable from the perspective of the bank and, therefore, the taxpayer.

The commission further found the decision made by Siteserv to grant exclusivity to Millington and its owner was a decision made "without even considering whether to contact Anchorage, the other leading bidder" before exclusivity was granted to Millington and its owner. Further, the commission found this decision favoured Millington and its owner by conferring a "significant advantage over other bidders in seeking to acquire the Siteserv Group". As a result, the report found that by failing, or even refusing, to consider the offer that had been made by Anchorage, Siteserv had shut out IBRC from considering the offer. Given the €162 million owed by Siteserv to IBRC at the time, this failure to consider and disclose the Anchorage offer was totally improper.

The commission also found that, throughout the Siteserv sale process, two parallel processes were at play, as the Taoiseach mentioned. One was above the surface, seemingly conducted by the company in plain view. The other was below the surface, in the shadows, carried out without the knowledge of IBRC. The report states, "This "below the surface" process meant that steps were taken and decisions made ... in the course of the Siteserv sale process in a manner that was manifestly improper and which undermined the integrity of the Siteserv sale process."

The report of the commission also made findings with respect to those in Siteserv most intimately involved in the transaction, and I will take a few moments to put some of those findings on the Dáil record. In March 2012, I asked the then Minister for Finance a question, which is on the Dáil record, about why IBRC had agreed to write down the value of its loans to Siteserv by more than €100 million, while at the same time shareholders of the company were paid €5 million as part of the deal, with a further question posed the following month. It was the first time it was raised in this House. The report we now have reveals that these questions led to a series of communications between the Department of Finance and IBRC, and led to meetings in the upper echelons of IBRC. IBRC then sought information from Siteserv, KPMG and Davy.

In August 2013, I made a freedom of information request for all copies of all Anglo Irish Bank's board papers that had been sent to the Department and the Central Bank in the relevant period. The report finds that IBRC did not furnish the Department with all of the relevant documentation. With respect to the payment that was made to shareholders as part of the Siteserv transaction, the commission has found that the credit committee at IBRC failed to pursue its own request for further information on the €5 million payment and approved the transaction without that information. The report concludes that failure contributed to IBRC recovering up to €2.1 million less from the proceeds of the Siteserv sale, a failure that, ultimately, undermined the interests of the taxpayer.

Mr. Dix was a director of the company and served as chair of Siteserv's sale committee. The report found he played a crucial role in the decision to grant exclusivity to Millington and its owner. The report found the decision conferred significant advantage to Millington above other potential bidders. In addition, the report reached the damning conclusion that "Mr Dix gave false, misleading and untruthful evidence in his sworn affidavits to the Commission" regarding his skiing and fitness bootcamp trip with the owner of Millington, Mr. O'Brien, in St. Moritz, Switzerland. His attendance at this so-called bootcamp with the owner of Millington was not disclosed to the board of Siteserv, its sale subcommittee, its company advisers or the bank. The report further found that this non-disclosure was not accidental but was deliberate. The commission reached the reasonable conclusion that if the relationship between Mr. Dix and the owner of Millington had been known at the time, including the fact they spent a weekend together on a skiing and fitness bootcamp in the Swiss Alps, it would have "given rise to a perception on the part of a reasonable, objective person that Mr Dix was not impartial in his role as chairman of the Sale Sub-Committee".

At the time of the Siteserv-Millington transaction, Mr. Harvey was CEO of the company. The report reaches no less damning conclusions about him. The relevant section of the report in this regard states the commission found that although Mr. Harvey attended a Siteserv board meeting on 4 March 2012 and voted to approve the sale of Siteserv Group to Mr. O’Brien, "he concealed from the Board the fact that he had a significant financial interest in Mr O’Brien’s bid succeeding". Those are the words of this report. The report continues, "He also concealed from the Board that Mr McFadden was arranging a plan whereby Mr Harvey would purportedly not have to pay tax on his Siteserv bonus." It later states that those were clearly material interests to be disclosed to the board and yet Mr Harvey failed to do so. These findings are damning and reveal a corporate culture that rode roughshod over the principles of openness.

With respect to Mr. McFadden, who was cofounder of Siteserv, the report makes damning findings that must now be investigated by Revenue as a matter of urgency. These findings are shocking and reveal the disregard which some in high places have for the requirements which ordinary citizens abide by every day. The commission found that Mr. McFadden set out to put forward two scenarios. One scenario is described as a story and the other is described as the reality. These scenarios were to ensure the €350,000 bonus to be paid to Siteserv’s CEO would not be declared to Revenue. On the afternoon that IBRC was to clear the sale of Siteserv to Millington and Siteserv was to approve the sale, Mr. McFadden met with the owner of Millington’s adviser beforehand to finalise a plan through which Mr. Harvey and Mr. McFadden would take shareholdings in the company that bought Siteserv.

Through a chain of emails, Mr. McFadden set out these two scenarios. Its purpose was to set out the money that would be given to Mr. Harvey from a Siteserv bonus and the proceeds of the Siteserv shares, and the money he would need to repay the €1.7 million debt to the Irish Bank Resolution Corporation, IBRC and to buy shares in the company that would acquire Siteserv. The story Mr. McFadden told was that Mr. Harvey would pay income tax and PRSI on his expected bonus. The reality Mr. McFadden described was that Mr. Harvey would waive his bonus, never pay tax on it, and still receive the full amount.

Although the commission found that Mr. Harvey did not waive the bonus, a scheme was established whereby the new company took on the obligation to pay the bonus, which was then bartered for shares in such a way that “no tax was ever paid on this bonus or on this grant of shares”, to quote the commission's report. The report goes on to say: “It is clear from the "story/reality" document that was sent by Mr McFadden ... that [he] constructed a scheme that was designed, from start to finish, not to disclose Mr Harvey’s bonus to the Revenue Commissioners at any time.”

The findings of the report are shocking, and lift a veil on the reckless and elitist culture that infected certain echelons of Irish business and high finance during a dark chapter in our State’s history, especially when it concerns a bank that the taxpayer had bailed out at huge economic and social cost. It is clear that there were those to whom the ordinary rules that bind ordinary citizens were seen not to apply.

The findings of the report also reveal the sad fact that has bedevilled the State and its citizens for far too long. This is a small place, with a small population, in which those with power and money often swim in the same circles, rub shoulders and even go skiing together in the Swiss Alps. This leaves open the possibility and perception of impropriety or even corruption. I am extremely concerned at the reckless disregard with which highly confidential information passed hands without authorisation before making its way to those who had an interest in accessing it.

We know that the revolving door between the corporate world and the State is one that opens at times when it should in fact be closed. In my opinion, we still do not have robust enough safeguards in place to ensure that individuals do not move freely and with ease between the corridors of corporate Ireland and the corridors of power. It exposes our State to undue risks and casts doubts over the State’s ability to act independently on behalf of its citizens.

The report of the commission of investigation on the Siteserv transaction runs into thousands of pages, and Dáil time does not allow for an exhaustive consideration of all of its findings. We have, however, come to the end of a seven-year process, one that will cost more than the €30 million that had been previously anticipated. I am aware that under the commission’s remit, there are another 37 transactions with respect to IBRC that could be investigated. We now need to take stock of this process and whether it is fit for purpose, whether it delivers value for money for the taxpayer and whether it acts as an incentive or disincentive for further corporate malpractice.

That reaching findings regarding the propriety or impropriety of a commercial transaction and the actions of those involved should depend on a process that has proved costly and slow cannot be the model we pursue. Ensuring our corporate enforcement procedures are fit for purpose is essential to ensuring that we can deter malpractice and wrongdoing. It is important that, following this report by the commission of investigation, the Government charts a path forward, one that sees us get to a point a lot more quickly, with less costs involved, but which gets to the truth in a fair and transparent way.

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